What the script does:
This script dynamically identifies and displays support and resistance levels for daily, weekly and monthly timeframes. These levels are untapped , meaning the respective candle (daily/weekly/monthly) did not close below the support or above the resistance level. They serve as potential liquidity pools due to positions accumulated by traders around these points.
How It works:
The script calculates the levels based on historical price data. It uses a sophisticated algorithm to detect pivot points in the price action, which are then classified as either support or resistance levels. These levels are determined for daily (D), weekly (W), and monthly (M) timeframes and are drawn on the chart as horizontal rays. The script is configurable, allowing users to show or hide levels for each timeframe, adjust the sensitivity of level detection, and limit the lookback period to minimize clutter.
The algorithm works as follows:
* Pivot Point Detection and Integrity Check: The algorithm begins by identifying pivot points, which are potential turning points in price action across daily, weekly, and monthly timeframes. A critical part of this process is ensuring that these levels have not been breached - meaning, for support levels, the price has not closed below them, and for resistance levels, the price has not closed above them. This integrity check helps filter out levels that might have lost their significance for future price movements.
* Classification Based on Price Movement and Level Integrity: After identifying a pivot point, the script classifies it based on the direction of price movement and confirms that the level still holds, indicating it hasn't been breached. This approach ensures that the levels marked are current and relevant, reflecting areas where the market sentiment might shift, leading to potential entry or exit points for traders.
* Drawing and Adjusting Levels on the Chart: The script then draws horizontal rays to represent these levels of support or resistance that have maintained their integrity. It offers customization options for these lines and ensures they are dynamically updated with new market data.
* Minimizing Chart Clutter with Relevant Levels: To keep the chart focused and useful, the script includes features to hide levels that are no longer relevant or are significantly far from the current price. This decluttering is based on user-defined settings that allow traders to focus on the most actionable levels—those that have not been breached and are in close proximity to the current price.
* Efficiency in Handling Data and Levels: Through the use of efficient data structures and matrices, the script ensures that only levels that are currently valid and have not been breached are maintained and displayed. This efficiency is crucial for the script's performance, particularly when dealing with large volumes of historical data across multiple timeframes.
How to use It:
* Interpreting Levels: Once the script is active, it will display the calculated support and resistance levels on the overlay of your chart. These levels can guide entry and exit points, set stop-loss orders, or identify potential breakout or breakdown areas.
* Configure Settings: The out-of-box settings are usually fine but there are options to choose which levels to display (daily, weekly, monthly), set colors for each level, and define how far back in time the script should look to identify these levels. You can also hide distant levels to reduce clutter
What makes It original:
The originality of this script lies in its multifaceted approach to identifying support and resistance levels across different timeframes, all within a single indicator. It combines the practical utility of daily, weekly, and monthly levels with advanced customization options, such as the ability to minimize chart clutter through a percentage-based visibility threshold. Moreover, its built-in functionality to adjust the sensitivity of level detection and the capacity to limit historical lookback provide users with a highly tailored tool, making it a unique addition to any trader's arsenal.
This script dynamically identifies and displays support and resistance levels for daily, weekly and monthly timeframes. These levels are untapped , meaning the respective candle (daily/weekly/monthly) did not close below the support or above the resistance level. They serve as potential liquidity pools due to positions accumulated by traders around these points.
How It works:
The script calculates the levels based on historical price data. It uses a sophisticated algorithm to detect pivot points in the price action, which are then classified as either support or resistance levels. These levels are determined for daily (D), weekly (W), and monthly (M) timeframes and are drawn on the chart as horizontal rays. The script is configurable, allowing users to show or hide levels for each timeframe, adjust the sensitivity of level detection, and limit the lookback period to minimize clutter.
The algorithm works as follows:
* Pivot Point Detection and Integrity Check: The algorithm begins by identifying pivot points, which are potential turning points in price action across daily, weekly, and monthly timeframes. A critical part of this process is ensuring that these levels have not been breached - meaning, for support levels, the price has not closed below them, and for resistance levels, the price has not closed above them. This integrity check helps filter out levels that might have lost their significance for future price movements.
* Classification Based on Price Movement and Level Integrity: After identifying a pivot point, the script classifies it based on the direction of price movement and confirms that the level still holds, indicating it hasn't been breached. This approach ensures that the levels marked are current and relevant, reflecting areas where the market sentiment might shift, leading to potential entry or exit points for traders.
* Drawing and Adjusting Levels on the Chart: The script then draws horizontal rays to represent these levels of support or resistance that have maintained their integrity. It offers customization options for these lines and ensures they are dynamically updated with new market data.
* Minimizing Chart Clutter with Relevant Levels: To keep the chart focused and useful, the script includes features to hide levels that are no longer relevant or are significantly far from the current price. This decluttering is based on user-defined settings that allow traders to focus on the most actionable levels—those that have not been breached and are in close proximity to the current price.
* Efficiency in Handling Data and Levels: Through the use of efficient data structures and matrices, the script ensures that only levels that are currently valid and have not been breached are maintained and displayed. This efficiency is crucial for the script's performance, particularly when dealing with large volumes of historical data across multiple timeframes.
How to use It:
* Interpreting Levels: Once the script is active, it will display the calculated support and resistance levels on the overlay of your chart. These levels can guide entry and exit points, set stop-loss orders, or identify potential breakout or breakdown areas.
* Configure Settings: The out-of-box settings are usually fine but there are options to choose which levels to display (daily, weekly, monthly), set colors for each level, and define how far back in time the script should look to identify these levels. You can also hide distant levels to reduce clutter
What makes It original:
The originality of this script lies in its multifaceted approach to identifying support and resistance levels across different timeframes, all within a single indicator. It combines the practical utility of daily, weekly, and monthly levels with advanced customization options, such as the ability to minimize chart clutter through a percentage-based visibility threshold. Moreover, its built-in functionality to adjust the sensitivity of level detection and the capacity to limit historical lookback provide users with a highly tailored tool, making it a unique addition to any trader's arsenal.